When AMP announced its new advice strategy last month, including a significant reduction in practice values, the news sparked anger and frustration among a significant cohort of its advisers.
But unlike its main banking competitors, the group is not seeking to sell its consulting arm; instead, she set herself the ambitious task of trying to serve more customers.
A study by Momentum Intelligence shows that 71% of Australians who don’t have a financial advisor don’t actually know what they’re doing. There is a fundamental lack of awareness among the population about the value of counseling. The royal commission, which received widespread media coverage, did not help groups like AMP or its network of 2,200 advisers.
The company announced plans to invest half a billion dollars in its advisory channel, including the development of a digital offering that Wade said will facilitate human interactions rather than compete with them.
“I think there is a very big market for face-to-face. I think it will increase given the departure of competitors,” he said.
“The problem with face-to-face advice is that it is becoming more and more expensive, given regulatory changes and compliance costs.
“The AMP strategy is about doubling down on all advice where others are leaving. I think we need to focus on ensuring that our face-to-face advisors have business-level professional practices. We also need to solve the underlying digital problem.
Mr Wade sees the digital advice element as effectively acting as an engagement tool for the mass market – clients who cannot afford to pay high annual fees to a financial advisor. Again.
“It will be possible through phones, people still want to talk to someone, but I think for the general Australian public, people who don’t yet have the means to receive face-to-face advice, we We need to solve this problem with digital technology. This digital channel will then send people to the three levels, by telephone or face to face.
“I think it will help our advisers, whether employed or aligned, because they will be able to use our digital service for some of those clients who can’t afford face-to-face advice. For example, their clients’ children,” he said.
As service fees replace commissions, the natural trend has been for consultancies to move upmarket and begin serving wealthier clients who can actually afford to pay their fees.
“All of this creates a problem for those who cannot afford counselling,” Mr Wade said. “We are trying to counter that. We announced $500 million to invest in advice. Much of this will depend on the technology in the practices, of compliant design, to make them as efficient as possible.
No Australian company has been able to successfully deliver a digital advice offering that is adopted by the mass market. Again. But AMP thinks it can do just that.
The company’s brand has been badly damaged by a series of scandals in recent years. His new advice strategy has sparked a backlash from advisers who have already received dismissal letters. But that’s only half the story.
The group recently raised $784 million from shareholders, much of which will be spent on bringing a digital advisory solution to market while continuing to grow its network of employed and aligned advisors. The company has been in the consulting game for a long time. Its new approach appears to use the power of digital channels to optimize face-to-face advice, rather than eradicate it.
